Of­fi­cials move to block merger

They say a tie-up of fan­tasy sports firms DraftKings, FanDuel will hurt com­pe­ti­tion.

Los Angeles Times - - TECHNOLOGY - By Jim Puz­zanghera jim.puz­zanghera @la­times.com Twit­ter: @JimPuz­zanghera

WASH­ING­TON — Fed­eral and state of­fi­cials on Mon­day moved to block the merger be­tween DraftKings Inc. and FanDuel, ar­gu­ing the com­bi­na­tion would harm com­pe­ti­tion by lock­ing up 90% of the daily fan­tasy sports mar­ket in the U.S.

The Fed­eral Trade Com­mis­sion said it would file suit seek­ing a court in­junc­tion to stop the deal, joined by the at­tor­neys gen­eral of Cal­i­for­nia and the District of Columbia.

“This merger would de­prive cus­tomers of the sub­stan­tial ben­e­fits of di­rect com­pe­ti­tion be­tween DraftKings and FanDuel,” said Tad Lip­sky, act­ing di­rec­tor of the com­mis­sion’s com­pe­ti­tion bureau.

DraftKings, based in Bos­ton, is the largest daily fan­tasy sports com­pany based on en­try fees and rev­enues, the FTC said. FanDuel of Scot­land is No.2.

Cus­tomers pay a fee to se­lect a lineup of pro­fes­sional ath­letes, then com­pete for daily prizes based on their on-field per­for­mance. DraftKings and FanDuel com­pete to of­fer the best prices, largest prizes and great­est va­ri­ety of con­tests, the FTC said.

In a joint state­ment, DraftKings Chief Ex­ec­u­tive Ja­son Robins and FanDuel Chief Ex­ec­u­tive Nigel Ec­cles said they would “work to­gether to de­ter­mine our next steps.”

“We are dis­ap­pointed by this de­ci­sion and con­tinue to be­lieve that a merger is in the best in­ter­ests of our play­ers, our com­pa­nies, our em­ploy­ees and the fan­tasy sports in­dus­try,” they said.

Other fan­tasy sports con­tests in­volv­ing com­pe­ti­tions over an en­tire pro­fes­sional sea­son are not likely to be “a mean­ing­ful sub­sti­tute for paid daily fan­tasy sports,” the com­mis­sion said.

The FTC voted 2-0 to au­tho­rize its staff to seek a tem­po­rary re­strain­ing or­der and pre­lim­i­nary in­junc­tion in fed­eral court.

Some state of­fi­cials have com­plained that the com­pe­ti­tions amount to il­le­gal sports bet­ting and have banned them. Cal­i­for­nia has not banned them.

In Jan­uary 2016, the Cal­i­for­nia state Assem­bly ap­proved a bill li­cens­ing daily fan­tasy sports sites to op­er­ate in the state, but the leg­is­la­tion was never taken up by the state Se­nate.

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